The Rev. Andrew Walter, Canon to the Ordinary and Chief Operation Officer presented the new Stewardship Strategy for Parish Facilities and Finances at the 2024 Diocesan Convention.
Good Morning. I’m pleased to speak to you about one of the most consequential of our diocesan goals:
We will develop a stewardship strategy for our facilities and finances so that parishes are not constrained by building concerns.
During the diocesan-wide listening sessions that informed our strategic plan, one of the issues that kept coming up was the high cost of maintaining our church buildings and properties, and how those costs consumed a disproportionate portion of congregational resources that could otherwise be used for actual ministry.
As we emerged from the pandemic, this issue became more acute for many of us, as congregational income remained flat or even dropped, and higher inflation drove up maintenance costs. And for those congregations needing to refinance their mortgages, rising interest rates are forcing them to make larger– sometimes significantly larger–monthly payments.
The truth is, friends, our sacred buildings, despite their history, beauty, and architectural significance, are a financial liability. Toilets clog and overflow. HVAC systems breakdown, often at the worst possible time, and roofs need to be replaced – all of which consume financial resources.
Not long ago, I was speaking with our diocesan Treasurer, Jonathan Nicholas, about our buildings and their associated costs, and he said that church accounting is actually upside down. Congregations list their buildings and property as assets, but assets are defined as a source of future cash inflow, while in reality, our buildings are a source of cash outflow. So, for many of us, our facilities meet the technical definition of a liability.
As with all issues affecting congregational health and vitality, there are no easy solutions. There are, however, three ways to transform a church building from a liability into an asset, when vestries and congregational leaders are willing to make bold, faithful-filled decisions. As a diocese, and as diocesan staff, we can help provide resources and support for all three.
The three ways to turn a building from a liability into an asset are:
- Increasing Rental Income
- Redeveloping Church Property
- Selling a Building and/or Property
Let’s look at all three in more detail, starting with increasing rental income.
Many parishes already generate additional income by renting out space in their buildings. It may be the sanctuary that other faith communities will use for worship or it could be meeting and office space that outside groups will use to gather.
To maximize a building’s value as a source of income, it is essential for congregations to receive market rate rentals, and to do so, we will enlist the expertise of local commercial real estate brokers to assist vestries.
INCREASING RENTAL INCOME
Specifically, the diocese will have commercial real estate brokers on retainer to provide a market analysis of a neighborhood and an evaluation of parish space, so that vestries can clearly understand the going market rate in their area and what they can charge for rent. Such an analysis will be done upon your request.
We have already provided this assistance to congregations in several regions of the region and stand ready to help you.
These commercial brokers will also be able to help vestries market and lease space to potential tenants. In this situation, the vestry would enter into their own agreement with the broker. If and when the broker is able to secure a tenant for the vestry, the vestry would be responsible for paying the appropriate brokerage fee, upon execution of a final lease agreement.
Finally, the diocese will make available to all congregations template lease agreements that they can use when they lease space to other groups. This way, you will not have to draft your own agreements, but rather download an agreement from the diocesan website and tailor the agreement to meet your own specific needs.
Now, turning to the redevelopment of church property
REDEVELOPING CHURCH PROPERTY
In some situations, the best path or perhaps the only path forward for a parish will be to redevelop its church property. By using the term “redevelop”, I do not mean the renovation, repairing, renewing, or restoring of a building to good condition. By redevelop, I mean a vestry and parish partnering with real estate professionals to reimagine, replace, rehabilitate, and repurpose their buildings and properties. Recent examples here in the diocese include St. Anne’s in Northern Montgomery County and St. Thomas in Central DC.
This is a dramatic step, requiring faith and tenacity. Redevelopment is a lengthy, complicated process that involves government approvals, permitting, neighborhood engagement and legal guidance. From recent experiences within the diocese, we’ve learned there are many pitfalls in the redevelopment process, and congregations understandably struggle to manage all of the complications and details.
To help, the diocese is developing a roster of real estate professionals who can act as consultants, starting from the beginning when a vestry contemplates the possibility of redevelopment, through a market analysis and engagement with the community, and up to an evaluation of opportunities and partners. These consultants will not only have the necessary expertise in real estate, but also an understanding of the work and ministry of the church. Successful redevelopment will take into account the real estate, the neighborhood, and the congregation’s mission as followers of Jesus.
Recognizing that some parishes may not have the financial capacity to engage a consultant for some of the preliminary stages of the redevelopment process, the diocese will provide financial assistance in a manner determined by the circumstances of each church. If a vestry decides to move forward in redeveloping its property, the consultant would be compensated for their work by the vestry, with such compensation generated by income from the redevelopment.
As a reminder, any encumbrance of parish property requires approval from the Standing Committee of the diocese. Redevelopment projects almost certainly fall into this category. Therefore, a congregation seeking diocesan approval for redevelopment must be able to show how the redevelopment will lead to the long-term vitality and financial sustainability of a parish – based upon conservative financial projections – and the congregation must show it has done due diligence, including conversations with community leaders and stakeholders, so that everyone involved and affected by the redevelopment understands how the congregation’s sense of mission and the needs of the community are met by the project. This is transformative work of the highest order, and we want to help.
SELLING OF CHURCH PROPERTY
Lastly, the selling of church property.
Let me say first of all that none of us want to sell our property. Our church buildings are holy places, consecrated to God and made sacred by the generations who came before us to pray and worship. But, in all likelihood, some of us will have to sell property in the future.
A decision to do so would be incredibly difficult, but with all my heart, I believe it is better for a congregation to make a decision to sell while it still has a choice and a future, rather than wait until all assets have been exhausted and there is no choice, and no future for the congregation.
Any parish that must think about selling property will receive a lot of support from the Bishop, diocesan staff and leadership bodies of the diocese. We will walk alongside you. Together, we can mutually discern the long-term viability of the congregation. We can conduct a vitality assessment and review financial statements. We can identify real estate brokers who can analyze the property for opportunities and value. And, putting all of those pieces together, we can talk about a future, a new life, for a congregation unburdened by the stress and cost of maintaining buildings, and instead, focused on serving God and God’s people. Together, we can talk resurrection.
SUMMARY
In summary, the diocese will provide support to congregations seeking to
- Increase Rental Income
- Redevelop Church Property
- Sell a Building or Property
Visit the Stewardship of Facilities and Finances for resources and more information, and of course, if you would like to speak with me about any of these options or possibilities, please reach out.
Thank you.
